Seeking Alpha

Microsoft (MSFT) needs to hike its quarterly dividend by $0.03/share at next week's board...

Microsoft (MSFT) needs to hike its quarterly dividend by $0.03/share at next week's board meeting to keep investors happy, says MKM. The company announced a $0.04/share hike at last year's meeting, though a more modest increase is expected this time. MKM, which rates Microsoft a Neutral, is cutting its estimates due to both the usual set of PC-related concerns, and worries mixed reviews and OEM concerns about Windows 8 spell "a more elongated upgrade cycle." (previous)
Comments (12)
  • MSFT seems stuck. Lots of cash and not knowing what to do with it.
    14 Sep 2012, 03:04 PM Reply Like
  • For what is probably Microsoft's the biggest year ever for major product updates/releases "not knowing what to do with it" seems a strange comment.
    15 Sep 2012, 07:34 AM Reply Like
  • As an investor in MSFT I'm all for a divided hike. However why is it that people expect a hike to stay happy? At some point investors have to realize continued increases are not healthy for the company overall. What point that is for MSFT I don't know.
    14 Sep 2012, 04:46 PM Reply Like
  • Here's the reasoning. Microsoft is no longer a growth company. The languishing stock price and slow earnings growth (if at all) tells us that. It's future, if it is to survive as a stock (not a company) is to become a dividend growth company. That's the usual path for a mature company to follow. See Clorox, Proctor and Gamble, Coke, Altria, etc.


    If Microsoft does not increase its dividend enough to keep up with inflation, and then some, it will not succeed as a dividend growth stock either. It then becomes a GM or Ford or Xerox. Neither a good growth company nor a good dividend payer. That spells doom for the stock, if not eventually the company.


    So, ask yourself this. Why would you own a stock with little prospect for capital appreciation (increase in stock price) and poor income payouts that don't keep up with inflation? You would be crazy to do that.


    Hope this helps.


    15 Sep 2012, 10:56 AM Reply Like
  • It does. I personally don't see MSFT as being out of the stock growth arena. They need to do a better job of promoting their products and how diverse as a company they are. They desperately need new senior leadership. Steve Ballmer let Kevin Turner get into his ear and together have failed as company leaders. Their management largely are followers of these two senior execs. This flows down into the employees that are expected work together but are direct competitors with each other for their jobs. There is a fear for your job, intimidation style management there and it simply doesn't work. There products are very good and evolve to customer needs and requirements. Internally trust in these 2 senior managers is lost as it is with many middle managers where the company is very fat. Imagine the company with this management gone and all employees truly encouraged to work together and across old boundaries that have been removed. Its time for Bill and the BOD to do some serious house cleaning and expectation setting. That is how you fix MSFT so you're not dependant on increasing dividends to propel your stock. This is my personal opinion but I know many ex-Microsoft employs that would agree.
    16 Sep 2012, 12:30 PM Reply Like
  • Are you out of your mind - Microsoft not a growth company.


    Microsoft will eventually turn into a technology holding company paying a hefty dividend.


    The giant has awoken and is very,very hungry.


    17 Sep 2012, 12:38 AM Reply Like
  • We will get a nice dividend increase and the stock in the forties by this year.


    14 Sep 2012, 05:05 PM Reply Like
  • If MSFT is serious about smartphones it should buy RIMM. Use the excess cash to acquire millions of smartphone users if you want into that business.
    15 Sep 2012, 05:28 AM Reply Like
  • I agree!
    16 Sep 2012, 03:39 AM Reply Like
  • They have $60 Billion in cash! Cisco announced a 75% increase in their dividend last month. A large portion of their stock price is now about the dividend yield. They need to make a healthy increase in the Dividend.
    15 Sep 2012, 07:16 AM Reply Like
  • I agree Microsoft should buy Rimm!
    16 Sep 2012, 03:39 AM Reply Like
  • No thank you!
    16 Sep 2012, 03:39 AM Reply Like
DJIA (DIA) S&P 500 (SPY)